Skyline Herald No.3

ISSUE NO 03

RESORTBROKERS.COM.AU

THE

SKYLINE HERALD YEARS IN BUSINESS GOLD COAST

BRISBANE

MELBOURNE

The overwhelming response to the EOI campaign for Signature Broadbeach

Gallery House goes for $3.8m as The Aurora Group emerges as the winner

Melbourne Village deal confirms strong demand for Victorian assets

1985 - 2020

SIGNATURE BROADBEACH DEAL SECURED AFTER INTENSE INTEREST

GLOBAL MANAGER ULTIQA AWA R D E D THE M A N AG E M E N T R I G H T S TO T H E P R E M I U M D E S I G N LED COMPLEX DEVELOPED BY LITTLE PROJECTS. A five week Expressions of Interest campaign by ResortBrokers generated submissions from more than 20 local and international groups for the opportunity to secure the 25-year term agreement covering the management rights to Signature Broadbeach on the Gold Coast.

The campaign was managed by Tim Crooks and Alex Cook on behalf

“Signature Broadbeach presented as a highly attractive proposition for operators … the response exceeded all expectations.” of Little Projects which ultimately appointed global manager, ULTIQA Hotels & Resorts, as the successful operator of its management rights for the 256-apartment project.

“The management rights to quality buildings of this scale are increasingly hard to come by on the Gold Coast, particularly in Broadbeach,” said Tim Crooks, ResortBrokers Director of

New Developments.

“Because of this, we were expecting some high quality submissions and we were genuinely surprised not just by the sheer number of expressions of interest, but the quality from both Australia and overseas,” Crooks said.

Positioned in the heart of Broadbeach and just minutes from patrolled beaches, cafes, public transport, the Star Casino and Pacific Fair Shopping Centre, Signature Broadbeach will be something of a game-changer on the Gold Coast.

It proved there is great appetite for design-led projects that are rich in amenity, crafted to a high quality and well positioned in desirable locations.

Each of the 256 residences are oriented towards the ocean and all benefit from a huge 50-metre infinity edge pool, an expansive outdoor lawn, state-of-the-art gymnasium, onsite café, private cinema and more.

“Signature Broadbeach presented as a highly attractive proposition for operators, given its contemporary Rothelowman design and interiors by SJB, plus a level of amenity which has never before been seen on the Gold Coast,” said Alex Cook.

“With many aging complexes

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S I G N AT U R E , B R O A D B E A C H -

in the area and a scarcity of new developments on the market with this level of elevated quality, the response to Signature exceeded all expectations.”

Construction of Signature Broadbeach is underway and is expected to be completed in early

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256 Apartments

2022. More than 172 residences have been sold off the plan.

Residences at Signature started selling at $495,000 for one-bedroom, $619,000 for two-bedroom and $1.325m for three-bedroom dwellings and are expected to be fully sold. END

W H Y I T ’ S I M P O R TA N T TO TA K E CO N T R O L

OF SELLING AGENTS EARLY

GALLERY HOUSE, BRISBANE -

315 Apartments

Management rights to luxury riverside complex sold to The Aurora Group HOW A HIGHLY COMPETITIVE EOI CAMPAIGN RESULTED IN THE MANAGEMENT RIGHTS TO GALLERY HOUSE BEING SOLD FOR $3.8M. WITH the additional purchase of four units in the development, The Aurora Group secured the management rights to the Gallery House dual tower river front complex in Hamilton.

A five week Expressions of Interest campaign was run by ResortBrokers on behalf of the developer, Brookfield Residential Properties, with The Aurora Group emerging as the successful purchaser at $3.8 million, after the highly competitive process.

Gallery House, a 315 apartment luxury complex of two high-rise buildings with sweeping views over the Brisbane River to the CBD and suburbs, was completed in early 2020.

ResortBrokers Director Alex Cook said six high quality operators submitted detailed bids for the management rights to Gallery House but The Aurora Group’s extensive experience and proven track record was their key point of difference.

“We had interest from serious contenders including major investment syndicates and large management rights operators with extensive portfolios,” Mr Cook said.

“As we reduced the shortlist down, The Aurora Group kept presenting as the outstanding candidate with

their deep knowledge of how to professionally manage a property and provide excellent service to its residents and investors,” he said.

“They also showed their confidence in the project, taking a significant equity stake by purchasing four apartments for a total of $1.745 million.”

Integrating two striking towers at 19 and 20 levels, Gallery House

“We had interest from serious contenders including major investment syndicates and large management rights operators with extensive portfolios.” neighbours the Portside Wharf development. It delivers a rare level of sophisticated inner city living, including a rooftop sanctuary with river, city and mountain views, panoramic infinity edge pool, beautifully appointed outdoor lounge, BBQ facilities and entertainment area. END

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IF you’ve taken the decision to establish your development under a management rights model, then no doubt you’ll be aware that the size of the letting pool on settlement will, to a large extent, determine the ultimate value of your asset.

Quite simply, for the vast majority of deals, the more letting pool appointments that the incoming management rights operator is able to secure, the more the developer receives on the sale price.

For this reason, developers need to do everything in their power to make sure they control their selling agents from the outset. What you don’t want is selling agents simultaneously offering an offsite letting service while they’re engaging and selling to investors.

With an increasing number of selling agents seeking to develop property management arms, this is a growing problem.

However, you can stop this happening. The best way to get on top of this situation is to require the selling agents sign a “restraint of trade”

agreement as a condition of them being appointed. That document prevents the selling agent from chasing letting appointments and offering letting services within a development that they have sold units. If they do, it provides a solid basis to pursue the matter legally.

Usually, this isn’t necessary and the restraint of trade document will be enough to keep them at bay.

As a developer, if you decide to offer incentives such as furniture packs or guaranteed weekly rent to assist with sales, make sure they are conditional on the buyer signing an agreement to the management rights operator for letting services. Again, this gives you more control over the letting pool, ultimately resulting in you receiving a higher price for the management rights.

Make no mistake, simple steps like these can mean the difference of millions of dollars. It’s important to have all these steps in place right from the outset and, as always, please get in touch with us if you’d like help or advice in setting them up. END

QUITE SIMPLY, TIM AND ALEX ARE THE BEST IN THE BUSINESS AND THIS IS DOWN TO THEIR KNOWLEDGE, EXPERIENCE, CONTACTS AND SHEER TENACITY. THEY’RE ADEPT AT PUTTING MULTIPLE HIGH QUALITY PURCHASERS IN A COMPETITIVE ENVIRONMENT TO DELIVER NOT JUST THE BEST PRICE, BUT ALSO THE BEST COMMERCIAL TERMS.

J O N AT H A N D E A G U E – M A N A G I N G D I R E C T O R D E AG U E G RO U P / A RT S E R I E S H OT E L S

TOP TIP: THE PERILS OF DIRECT DEALS FOLLOWING THIS GOLDEN RULE WILL ENSURE DEVELOPERS CAN ACHIEVE MAXIMUM VALUE FOR THEIR ASSET. MANAGEMENT rights are in demand, so developers can be easily tempted by a direct approach from buyers offering what sounds like a good deal. But be warned, the chances are you’ll sell your management rights short and lose out.

“Nine times out of ten, I guarantee, this will result in your assets being dramatically undersold,” said Tim Crooks.

“Even if you factor in your saving on commission, the developer is more than likely to be worse off.

“Not only that, it is likely you will not secure the most appropriate operator but instead be dealing with an opportunist with a convincing pitch and

a bit of ready cash.

“It is vital for developers to not only achieve optimum financial return for their management rights sale but also to secure a quality operator who will provide the best possible service to your investors, which in turn supports the brand and reputation of the project and its developer.”

ResortBrokers usually implements a competitive Expressions of Interest campaign with the aim of achieving a win for the developer in both areas: a great price combined with a quality operator who will enhance the developer’s reputation moving forward.

These two considerations are vital for all developers. END

WE’RE ALWAYS ON THE LOOKOUT FOR NEW ACQUISITIONS AND WE RELY ON RESORTBROKERS TO PRESENT US WITH THE BEST OPPORTUNITIES ON THE MARKET. WHEN YOU DEAL WITH TIM AND ALEX, YOU ARE GETTING A HIGHLY MOTIVATED AND ENERGETIC TEAM WHOSE EXPERIENCE AND PROFESSIONALISM ENSURE THE WHOLE BUYING PROCESS IS SEAMLESS.

M I C H A E L M U RTA G H – G M , U L T I Q A H O T E L S & R E S O R T S

YEARS IN BUSINESS

$2.5 BILLION T O TA L V A L U E O F A C C O M M O D AT I O N BUSINESSES SOLD IN T H E PAS T 10 Y E A R S

780

THE NUMBER OF MANAGEMENT RIGHTS W E H AV E S O L D I N T H E PAS T 10 Y E A R S

112 DEVELOPERS WORKED WITH IN THE LAST THREE YEARS

650

THE NUMBER OF MOTELS W E H AV E S O L D I N T H E PAS T 10 Y E A R S

PAV I L I O N S 8 8 , A N N E R L E Y

HOW BIG DOES A DEVELOPMENT NEED TO BE TO MAKE MANAGEMENT RIGHTS VIABLE? W H Y I T ’ S S O I M P O R TA N T T O E S TA B L I S H Y O U R M A N A G E M E N T R I G H T S S T R U C T U R E E A R L Y A N D TA K E C O N T R O L O F I N V E S T O R S I N T H E L E T T I N G P O O L .

A question we are commonly asked by developers is "how big does a development have to be for management rights to be feasible?” The answer is “smaller than you may think”. If a developer is well organised before the commencement of sales, management rights can work on a development as small as 30-40 apartments or townhouses.

The rule of thumb is that you need a minimum of 20-25 letting appointments and a body corporate salary of $1000 per lot per annum to make a business viable. This means developers of small complexes really need at least 50% of purchasers to be investors, as well as the vast majority of them to join the onsite manager’s letting pool. Remember, having a high percentage of investors does not automatically mean they will convert to letting appointments for the onsite manager. For more information on how to control your investors please refer to the article on the opposing page, “Controlling Your Selling Groups”.

The key consideration is to get the management rights structure in place early, by working with a specialist lawyer to prepare a suitable caretaking and letting agreement. This includes matters such as ensuring there is no requirement to live on-site, no requirement to own a lot and no set office hours. Liaise with your specialist MR broker and strata

manager to review daily, weekly and monthly duties to ensure that the lot owners are getting the best service while keeping the MR asset as marketable and valuable as possible.

Developers that have the foresight to get their agreements disclosed correctly prior to commencing sales, combined with ensuring control of their selling agents and groups, will benefit from owning a commercially viable management rights business that will be highly saleable even with a small boutique development.

“The rule of thumb is that you need a minimum of 20-25 letting appointments…”

Sometimes we’ve seen developers go about it the hard way in that they approach the sales process first and then revert back to the management rights model at a later date. This incurs additional legal costs and requires redisclosure to all lot owners which could be seen as a material change, thereby putting your unconditional sales at risk.

As mentioned above, in Queensland and NSW developers are required to disclose their agreements up front.

However, in Victoria developers are not required to disclose the agreements until just prior to the settlement of the lots at the first OC meeting. If you have a project under construction in Victoria, please contact us as a matter of urgency as there may be some additional value in your development that you have not explored.

To put the scale of the off-theplan market for management rights to smaller ‘boutique’ complexes in context, ResortBrokers has in the last two years acted on sales to roughly 40 Brisbane, 20 Gold Coast and 5 Sunshine Coast, sub-50 unit complexes. They are highly soughtafter, generally as ‘add-on’ acquisitions to established and experienced operators.

Developers can expect to get the best of both worlds…a great price and a great operator.

We’re here to guide you through every step of the process, from initial establishment through to settlement… often a 2 year+ process. We each have almost a decade of experience in helping developers improve their bottom line while ensuring their asset is managed professionally. Our experience and advice is offered at no cost to you and we’re happy to talk at any time. END

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O F F T H E P L A N V I C TO R I A N MANAGMENT RIGHTS SOLD IN LAST 24 MONTHS

operators with extensive portfolios.”

In the past few years, Resort Brokers has led the way in igniting developer interest in establishing and selling ‘offthe-plan’ management rights. Recent high profile sales include AVANT and Australia 108, on behalf of World Class Land and Collins House and Sky One, on behalf of Golden Age, as well as the Ritz in Geelong.

The management rights model is long established and heavily legislated in Queensland, but although there has been a smattering of management rights established in Victoria over the years, it has remained a comparatively fledgling industry, Alex Cook said

MANAGEMENT RIGHTS

“We’ve had little trouble attracting some of the best in the business to projects in Melbourne.”

DEVELOPER interest in selling management rights in Melbourne has risen sharply over the past five years with ResortBrokers leading the way in handling successful and high profile marketing and sales campaigns.

Tim Crooks and Alex Cook, both directors at ResortBrokers, have established themselves as the “go to” team for developers who are looking to add value to their projects in and around the city.

One of their most recent management rights sales was for Melbourne Village on behalf of renowned accommodation developers, the Deague Group, who specialise in

“With construction costs rising and margins decreasing, and developers looking for viable ways of improving their bottom line, we have seen a significant increase in interest in establishing management rights over new developments. This has been compounded by developers also looking for regulated models to help stop the spread of Airbnb in their properties… which is something management rights offers.

“Our recent track record demonstrates both the viability and potential to developers in setting up and selling management rights, as well as the strong appetite from national and international operators to invest in these assets.” END

MELBOURNE VILLAGE, MELBOURNE -

529 Apartments

TA K I N G H O L D I N M E L B O U R N E

luxury projects such as the Art Series Hotel.

An Expressions of Interest campaign was conducted exclusively

by ResortBrokers with a price guide of between $8 million to $10 million for the twin tower project.

The 21 and 27 level towers have 496 apartments and 33 townhouses, for a total of 529 keys, and around 80 percent were sold to investors, creating a potential letting pool of more than 400 units.

Completed in early 2020, Melbourne Village is positioned in West Melbourne between the CBD and the city’s vibrant waterfront precinct, with

superior interior design features and views in every direction.

Tim Crooks said the Melbourne Village campaign typified demand for high quality assets, especially in Melbourne’s CBD, with several high quality operators submitting very detailed and competitive offers.

“We’ve had little trouble attracting some of the best in the business and our last half dozen or so campaigns have resulted in us being able to present some outstanding offers to developers,” Mr Crooks said.

“We’ve had interest from serious contenders including major investment syndicates and large management rights

CONTACT US TODAY!

TIM CROOKS

ALEX COOK

Director of New Developments

Director

0422 208 450 tim@resortbrokers.com.au

0467 600 610 alex@resortbrokers.com.au

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